All eyes will be on this week’s key release, the March US Employment Report. The report is expected to deliver the first sizeable increase in US payrolls since November 2007. After declining by 36k last month, partly due to bad weather, payrolls are forecast to have recovered by around 200k in March. Over recent weeks, leading indicators of the US labour market have continued to improve. The employment component of the latest manufacturing ISM, for example, is currently at its highest since November 2005. Against a firmer employment backdrop, the unemployment rate is forecast to drop from 9.7% to 9.5%. This week’s numbers could mark a clear turning point for the US labour market although, given the challenges still facing the US economy, it is likely to be some time before payrolls are posting sustained monthly gains of 200k plus. Given its importance, a strong payroll could prompt a significant market reaction, especially as the closure of markets in Europe for the Good Friday holiday is likely to mean liquidity conditions are thin. Apart from the labour market data, this week’s US calendar also includes the latest Chicago PMI and ISM manufacturing surveys. We expect both reports to build on the gains in recent months. US consumer confidence, personal income and spending, and house price data are also due. As we approach the end of the first quarter, the statistical noise surrounding many of the recent data releases continues to cloud the underlying view of the UK economy. Last week’s retail sales figures were a case in point. Although retail sales jumped by 2.1% in February, the impact of the increase was substantially tempered by a marked downward revision to the January outturn, as the extreme weather conditions that month played havoc with the data. It is not only the retail sales report that has been volatile: the recent industrial production, labour market, PMI and CPI reports have also been sending mixed messages. The market should get a better sense of the economy’s underlying strength from the forthcoming March data. This week sees the first of the key March releases, namely the manufacturing PMI. In recent months this survey has posted a strong recovery, underpinned by the fall in the pound, rising global trade and a slower pace of destocking. The results of our latest in-house Business Barometer, however, suggest that the pace of improvement was not sustained over the past month. As a result, we look for the manufacturing index to drop back to 56.0, from 56.6 in February. Another important UK release this week will be the final Q4 GDP report. Although less timely than the PMI, the survey will contain more detail about the forces shaping growth in the latter months of 2009, including the household saving ratio. Accompanying the GDP report, the Q4 current account figures will be watched for an indication of whether the UK’s imbalances are improving. We expect little change. Also this week, the latest UK consumer credit, mortgage lending and approvals figures are due along with the BoE’s Credit Conditions Survey for Q1. For now, the focus in the eurozone remains less on the economic data and more on the fiscal travails of Greece and some of the other peripheral EMU members. The support package agreed by eurozone leaders last week represents a positive step forward, providing the euro exchange rate with some much needed solace, at least for now. The prospect of any sustained improvement in the euro’s fortunes, however, could well be tested if, as expected, this week’s US data surprise on the strong side. Although unlikely to be major market movers, the eurozone economic calendar is fairly busy this week. Amongst the more important releases, the latest CPI and employment figures are due in Germany, while later in the week, the EU-16 flash CPI and European Commission’s confidence surveys are published. We expect the overall tone of this week’s eurozone economic releases to be slightly firmer, consistent with a slow economic recovery